DHS awards $79M for CTX scanner maintenance, raising questions about competition and value

Contract Overview

Contract Amount: $79,042,518 ($79.0M)

Contractor: Smiths Detection, Inc

Awarding Agency: Department of Homeland Security

Start Date: 2008-03-14

End Date: 2011-09-30

Contract Duration: 1,295 days

Daily Burn Rate: $61.0K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COMBINATION (APPLIES TO AWARDS WHERE TWO OR MORE OF THE ABOVE APPLY)

Sector: Other

Official Description: GE HOMELAND SECURITY HSTS04-05-D-DEP008 INCREMENTAL FUNDING OY (OPTION YEAR) 3 FOR MAINTENANCE OF CTX 2500, 5000, 9000, AND 9400 REPLACED CT3026

Place of Performance

Location: NEWARK, ALAMEDA County, CALIFORNIA, 94560, UNITED STATES OF AMERICA

State: California Government Spending

Plain-Language Summary

Department of Homeland Security obligated $79.0 million to SMITHS DETECTION, INC for work described as: GE HOMELAND SECURITY HSTS04-05-D-DEP008 INCREMENTAL FUNDING OY (OPTION YEAR) 3 FOR MAINTENANCE OF CTX 2500, 5000, 9000, AND 9400 REPLACED CT3026 Key points: 1. The contract's value, while substantial, requires careful benchmarking against similar maintenance services. 2. Limited competition for this contract may have impacted pricing and overall value for taxpayers. 3. The duration of the contract and its incremental funding structure warrant scrutiny for potential cost overruns. 4. Performance context is crucial to understand if the maintenance services have met security objectives. 5. This contract falls within the security systems services sector, a critical component of transportation security. 6. The lack of small business involvement suggests a focus on large, specialized providers.

Value Assessment

Rating: fair

The award of $79 million for maintenance of CTX scanners over several years presents a significant expenditure. Benchmarking this against industry standards for similar security equipment maintenance is essential. Without comparative data on pricing for equivalent services, it is difficult to definitively assess value for money. The incremental funding approach also warrants closer examination to ensure cost-effectiveness throughout the contract's life.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, indicating that only one vendor, Smiths Detection, Inc., was considered capable of performing the required maintenance. This lack of competition means that the government did not explore alternative providers or leverage competitive bidding to potentially secure more favorable pricing. The justification for a sole-source award needs to be robust to ensure it was truly necessary.

Taxpayer Impact: Sole-source awards can lead to higher costs for taxpayers as there is no competitive pressure to drive down prices. This limits the government's ability to achieve the best possible value.

Public Impact

The Transportation Security Administration (TSA) benefits directly through the continued operational readiness of its CTX baggage screening equipment. This contract ensures the maintenance of critical security infrastructure at airports, contributing to national security. The services delivered are essential for maintaining the functionality and reliability of advanced threat detection systems. The geographic impact is nationwide, as TSA operates these scanners at numerous airports across the United States.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to inflated pricing.
Sole-source award raises concerns about the government's ability to secure competitive pricing.
Incremental funding could obscure the total cost and potential for cost overruns.
The specific maintenance requirements and their associated costs need detailed justification.
Long-term reliance on a single provider could create vendor lock-in.

Positive Signals

Ensures continued operation of critical security screening equipment.
Maintains the functionality of advanced threat detection systems.
Supports national security by safeguarding transportation infrastructure.

Sector Analysis

This contract falls within the broader security and defense sector, specifically focusing on the maintenance of specialized security systems. The market for such advanced screening technology and its upkeep is often dominated by a few key players due to the high technical expertise and proprietary nature of the equipment. Benchmarking spending would involve comparing this contract's value to other government or commercial contracts for the maintenance of similar high-value security screening systems.

Small Business Impact

The contract data indicates that this award was not set aside for small businesses, and there is no explicit mention of subcontracting requirements for small businesses. This suggests that the primary contractor, Smiths Detection, Inc., is likely a large corporation handling the entirety of the maintenance services. Consequently, there is minimal direct impact on the small business ecosystem in this specific award, though larger prime contractors may engage small businesses for ancillary support services not detailed here.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Homeland Security's procurement and program management offices, with potential involvement from the Transportation Security Administration's contracting officers. Transparency regarding the justification for the sole-source award and the detailed breakdown of maintenance costs would be key areas for oversight. Inspector General audits could be initiated if specific concerns regarding performance or cost-effectiveness arise.

Related Government Programs

Department of Homeland Security - Airport Security
Transportation Security Administration - Equipment Maintenance
Federal Aviation Administration - Airport Infrastructure
General Services Administration - Government Procurement

Risk Flags

Sole-source award
Potential for non-competitive pricing
Lack of transparency in cost justification
Long-term maintenance dependency

Frequently Asked Questions

What is this federal contract paying for?

Department of Homeland Security awarded $79.0 million to SMITHS DETECTION, INC. GE HOMELAND SECURITY HSTS04-05-D-DEP008 INCREMENTAL FUNDING OY (OPTION YEAR) 3 FOR MAINTENANCE OF CTX 2500, 5000, 9000, AND 9400 REPLACED CT3026

Who is the contractor on this award?

The obligated recipient is SMITHS DETECTION, INC.

Which agency awarded this contract?

Awarding agency: Department of Homeland Security (Transportation Security Administration).

What is the total obligated amount?

The obligated amount is $79.0 million.

What is the period of performance?

Start: 2008-03-14. End: 2011-09-30.

What is the track record of Smiths Detection, Inc. in fulfilling similar maintenance contracts for the TSA or other federal agencies?

Smiths Detection, Inc. is a well-established provider of security screening technology and services. They have a history of supplying and maintaining advanced threat detection systems, including CTX scanners, for various government agencies, including the TSA. Their track record generally involves large-scale contracts for equipment and ongoing maintenance. Specific performance metrics and past issues, if any, on similar TSA contracts would provide a more detailed understanding of their reliability and effectiveness in fulfilling such critical security maintenance roles. Reviewing past performance evaluations and contract close-out reports would be necessary for a comprehensive assessment.

How does the per-year cost of this maintenance contract compare to industry benchmarks for similar security screening equipment?

The total award of $79,042,517.76 over an approximate period of 3.5 years (from March 2008 to September 2011) averages to roughly $22.58 million per year. Benchmarking this figure requires detailed knowledge of the specific CTX models (2500, 5000, 9000, 9400) and the scope of maintenance (e.g., preventative, corrective, parts included). Generally, maintenance contracts for complex, high-throughput security screening systems can be substantial. However, without access to proprietary pricing structures or comparative data from other agencies maintaining similar equipment, it is challenging to definitively state if this rate is above, below, or in line with market expectations. A detailed cost breakdown from the contractor and comparison with other government or commercial maintenance agreements would be needed.

What are the specific risks associated with a sole-source award for critical security equipment maintenance?

The primary risk of a sole-source award for critical security equipment maintenance is the potential for inflated costs due to the absence of competitive bidding. This can lead to taxpayers paying more than necessary for the services. Another risk is reduced incentive for the sole provider to innovate or improve service quality, as there is no direct competition to spur such efforts. Furthermore, it can create vendor lock-in, making it difficult and potentially more expensive to switch providers in the future if performance issues arise or better alternatives become available. Dependence on a single supplier also introduces supply chain risks if that supplier faces operational or financial difficulties.

What is the expected impact of this contract on the operational effectiveness of TSA's baggage screening capabilities?

This contract is directly intended to ensure the operational effectiveness of TSA's baggage screening capabilities by providing essential maintenance for the CTX 2500, 5000, 9000, and 9400 systems. These machines are critical for detecting explosives and other threats in checked baggage. By ensuring these systems are well-maintained, the contract aims to minimize downtime, maintain detection accuracy, and support the TSA's mission of securing air travel. The successful execution of this maintenance agreement is therefore crucial for the consistent and reliable functioning of a key component of airport security infrastructure.

How has federal spending on security systems services (NAICS 561621) trended in recent years, and how does this contract fit into that trend?

Federal spending on security systems services (NAICS 561621) has generally seen consistent demand, particularly following heightened security concerns. This sector includes the installation, maintenance, and monitoring of security systems. Spending in this area is often driven by national security priorities, infrastructure protection, and the need for advanced surveillance and detection technologies across various government agencies. This specific contract for CTX scanner maintenance represents a significant allocation within this category, reflecting the substantial investment in airport security technology. While overall trends show steady or increasing federal investment in security, the specifics of this contract (sole-source, long-term maintenance) highlight a particular approach to acquiring and sustaining critical security assets.

Industry Classification

NAICS: Administrative and Support and Waste Management and Remediation Services › Investigation and Security Services › Security Systems Services (except Locksmiths)

Product/Service Code: ALARM, SIGNAL, SECURITY DETECTION

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 1

Pricing Type: COMBINATION (APPLIES TO AWARDS WHERE TWO OR MORE OF THE ABOVE APPLY) (2)

Evaluated Preference: NONE

Contractor Details

Parent Company: Safran Power USA LLC (UEI: 275374015)

Address: 7151 GATEWAY BLVD, NEWARK, CA, 94560

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Manufacturer of Goods, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $79,042,518

Exercised Options: $79,042,518

Current Obligation: $79,042,518

Parent Contract

Parent Award PIID: HSTS0405DDEP008

IDV Type: IDC

Timeline